Applying accounting concepts, Assumptions and principles to explain business activity) apply your understanding of the relationships among the financial statements to answer these questions. 1. How can a business earn large profits but have a small balance of retained earnings? 2. Give two reasons why a business can have a steady stream of net income over a six-year period and still experience a cash shortage. 3. If you could pick a single source of cash for your business, what would it be? Why? 4. How can a business lose money several years in a row and still have plenty of cash